After their initial meeting in New York ended positively, PROTON Holdings Bhd and Germany’s Volkswagen AG are due to hold new talks according to Prime Minister Datuk Seri Abdullah Ahmad Badawi..

The two car makers could probably meet in Bangkok regarding a long-term strategic partnership, he said yesterday.

The government have been looking for another alliance for Proton since 2004. The Malaysian car company recently posted its maiden annual loss in 15 years will be needing the new parter to come up with new models and to increase their sales.

“The fact that they want to have another discussion means both sides were happy with the first results. Both sides are in positive mood. I don’t have the details yet. I need the details before I can say anything. Otherwise there will be further speculation and this will not be good,” said the Prime Minister after launching the 2007 National Imams Conference in Universiti Kebangsaan Malaysia in Bangi, Selangor.

On May 31, Proton reported its first-ever annual loss for fiscal 2007 since its listing in 1992. On the same day, Abdullah said Proton should talk to other firms since Volkswagen was not interested in a proposal from Proton. His comment had jolted the parties into action, which resulted to a meeting in New York last week.

On June 1, Second Finance Minister Tan Sri Nor Mohamed Yakcop said the Government will decide on who will be the partner for Proton in the next three months.

Earlier this month, reports from a local paper came out that Volkswagen is set to buy 51 percent stake in a newly formed unit that will own Protonâ€™s manufacturing, research and development and engineering divisions. After Edge Financial Daily reported this matter, Proton stock supposedly rose as much as 21 percent. The same news report also said that Sime Darby will buy a 43 percent stake in Proton Holdings from a Malaysian state investment company, Khazanah Nasional Bhd.

The Malaysian Government is still open to foreign car makers like Germany’s Volkswagen and US-based General Motors.

Nor Mohamed said that all the parties involved must “move fast” to resolve the problem at Proton, a 43 percent unit of Khazanah Nasional Bhd.

Once the car industry’s market leader, Proton’s market share has dwindled due to stiffer competition at home. Analysts have said that it needs a foreign partner to improve sales locally and abroad.

Khazanah managing director Datuk Azman Mokhtar said that talks with Volkswagen are still ongoing. Apart from Volkswagen, General Motors is also interested to partner Proton. “We want resolution soon. The team is working and meetings will be set for this month with the interested parties. For the local parties, the door is open to them. Khazanah is willing and able to sell some equities (in Proton),” he said at a media briefing in Kuala Lumpur.

The Government had earlier missed a March 31 deadline to find a suitable partner for Proton.